There are some policies that are pretty much no-brainers. We all agree that the Food and Drug Administration should keep dangerous drugs off the market. We all agree that the government should provide police and fire protection. And, we pretty much all agree that workers should be able to count on at least some minimal pay for a day's work.
The minimum wage is non-controversial. The vast majority of people across the political spectrum support the minimum wage. In fact, one of the big accomplishments of the Gingrich Congress in 1996 was a 22 percent increase in the minimum wage. The only real issue is how high it should be. There are good reasons for believing that the minimum wage should be considerably higher than it is today.
At the current rate of $7.25 an hour, a full-time year-round worker would have gross pay of less than $15,000 a year. This is less than half of what the average Fortune 500 CEO makes in a day. It would be hard enough for a single person to survive on this income, imagine trying to support a child or even two on this money. And, close to 40 percent of the workers who would be benefited by a minimum wage increase have kids.
The counter-argument against raising the minimum wage is that it would actually hurt the people we are trying to help by reducing employment. There is little basis for this claim. The impact of the minimum wage on employment is one of the most heavily researched topics in economics.
Most recent research finds that it has no impact on employment. Even the research that finds job loss shows that the effect is small, suggesting that a 20 percent increase in the minimum wage may reduce employment of young people by around 2 to 3 percent.
While it's not desirable to see anyone lose their job, it is important to remember the character of these jobs. They tend to be high turnover jobs that people leave after working relatively short periods of time. Job loss in this context is not likely to mean people being fired, rather it means that firms might be somewhat slower to hire. This would cause a typical low-wage worker to spend somewhat longer between jobs.
The dollars and cents might mean, for example, that a typical low wage worker ends up working 2 percent fewer hours in a year, but they take home 20 percent more pay for each hour that they work. This nets out to an increase in pay of 18 percent, a deal that most workers would likely consider pretty good.
In terms of whether we can afford a higher minimum wage, it is worth remembering that the minimum wage in 1968 would be almost $9.22 an hour in today's dollars. In spite of the high minimum wage in the late 1960s, the job creators of that period pushed the unemployment rate down to 3.0 percent.
And, the country has not gotten poorer in the last four and a half decades. We have policy wonks running around Washington who seem to think that cell phones, computers, the Internet, and all other innovations of the past four decades that we now take for granted have reduced our standard of living.
This is of course nonsense. Productivity has increased by more than 120 percent since the late 1960s. If the minimum wage had kept step with productivity growth and inflation it would be over $20 an hour today.
The real problem in our economy today is not a lack of productivity. The problem is that the gains from productivity growth have not been broadly shared. The wealthy have used their power to rig the deck so that most of the benefits of growth have gone those at the top. They have used their control of trade policy, the Federal Reserve Board, and more recently the Wall Street bailout, to ensure that those at the top have gained at the expense of everyone else.
A higher minimum wage is an important step toward reversing this rigging. It should not be too much to expect that workers today should get at least as much as they did 45 years ago, and perhaps some dividend to allow them to share in the benefits of economic growth over this period. A minimum wage of $10 an hour would be a big step in the right direction.
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In this case, people with low skills are basically left out of the workforce. The young and the "less-fortunate" have no hope of acquiring work which will lead to the skills which they could actually make more, not to mention the self-worth that people attain by holding down work rather than sitting at home playing video games all day.
Whoever gave you a job to write this column should also be re-thinking the requirement that everyone be paid a minimum wage. It looks like you need to sharpen your skills before trying this for a living.
Minimum Wage: Why is the government mandating poverty? How are you allowed to pay a wage that even working more than full hours, ensures that you live in poverty?
The dope that wrote this piece wrongfully assumes that the value of a dollar must remain constant. $10 is more than $8 and it always will be.
It is not surprising that it never goes the other way. Even when the costs of goods increases. People want the president or local government to reduce the cost of petroleum products when the increase in costs has a basis in the real world. Increases in food costs are viewed as bad even though supply has dropped due to drought or other issues. Such increases cannot be justified. But pay me more because I say so.
There would be millions of new jobs, and everyone would have food, shelter and healthcare at a minimal level.
Not only do the employers have to pay a wage they also have to pay workers comp, payroll taxes, insurance etc. if minimum wage was $20 an hour that is about 3 times more then it is now so instead of paying $6 for a burger and fries it would cost $20 that would be the same for groceries and any other goods and services that have minimum wage employees so any benefit for increase minimum wage would be nullified also there would be less chance for advancement . You act like people are either super rich or on minimum wage it’s not like that in the real world.
How can these liberal Democratic fools play around with economics that they don't understand anything about. We sit here watching Europe implode from the catastrophic failure of the Welfare State and then articles like this appear.
Do liberal Democrats just live with the heads in the sand ignoring reality 24-7-365????!!!!!
You just answered your own question.
The elepants in the room that you seem not to be talking about are (1) who actually works below minimum wage and how many of them are there and (2) the biggie -- the economic impact.
Suppose the minimum wage was $100 per hour. It's easy! The side effect would be that all products made by human labor, pretty much everything in other words, would incorporate that new wage and all of a sudden a $5 burger would be $100.
The number of burger's that an hour's minimum wage work can buy is unlikely to change.
A hidden burden exists -- pushing everyone into higher tax brackets means more money for government per hour of your labor.
Take out the "cheap" part and we'll probably agree. It's easy.
...or you could suppose it's 30% higher than it currently is and see the devastating impact.... by simply by looking at Australia. (or England, or Canada, or New Zealand; all places with a higher minimum wage than the United States, yet the impact on employment wasn't detrimental. They all have LOWER unemployment rates than the US.)
In other words, the number of burgers per day that a minimum wage worker can buy is unlikely to ever change. All you do is "revalue" the value of his labor. You can CALL it anything you want - $10 per hour, $100 per hour -- it makes no difference. it is still "minimum" and all goods and services will recalibrate prices onto the new normal.
You worked harder than I did. $100 for a burger is a WAG; the exact price cannot be calculated in advance even by skilled economists -- although I suspect they will quite naturally throw a number out there with an air of precision.
It is easier to create an illustration if the values you give are sufficiently exaggerated so you can see the impact.
An increase of 20 percent in the minimum wage, if no one actually was that low, would have no impact whatsoever.
If *everyone* was at minimum wage, then a 20 percent increase will increase the labor cost of everything by 20 percent. Some industries are 100 percent labor, others considerably less. Some industries have almost everyone at minimum wage, others have no one at minimum wage.
So it is quite complex and rather impossible to say with precision; so why do you try?
The fact is that most goods will increase more than zero but less than 20 percent in price. People that were already above minimum wage will see the higher prices, but not higher wages. That spells a decline in standard of living for everyone *except* the minimum wage workers.
But that's the point. The left engages in re-distribution by hook or by crook; or both at the same time ;-)